RHB | Malaysia | Leading Index Slowed In May, Economic Activities Will Likely Grow At A Moderate Pace Ahead, 25 July 2014

Economic Research	25 July 2014
Malaysia
Economic Highlights
Leading Index Slowed In May, Economic Activities Will Likely Grow At A Moderate Pace Ahead The Leading Index, which provides an early signal of the direction of the economy, dropped by 0.4% m-o-m in May, a reversal from a gain of 2.0% in April and compared with -0.8 in March. Correspondingly, y-o-y, the leading index slowed to +0.5% in May, from +0.9% in April. The slowdown in May’s leading index suggests that economic activities will likely expand at a more moderate pace in the months ahead, following the stronger-than-expected growth in the 1Q. This is on account of a slower increase in exports after a strong pick-up in 1H 2014, as the effect of a weaker currency fades and a higher base effect set in, while developed countries’ economic recovery continues to remain modest. Although domestic demand will likely moderate as well in the 2H 2014, dampened by slowing government spending due to fiscal consolidation and curbs on the property market, it will likely remain resilient. Economist:  Peck Boon Soon  | +603 9280 2163 Economist:  Shafizal Shafaai  | +603 9280 2179